And you don't have to kill your social life, either
Nancy Zambell,
I’m not an expert here, but I do
know a little bit about saving and investing. And right now, you can’t pick up
a newspaper or turn on the TV without finding some money-saving tips.
The problem with most of those tips is they often require what people might consider “sacrifice,” and therefore become more difficult to sustain. For instance, I bet you’ve heard at least a hundred times to ditch your daily $4 Starbucks coffee and make your morning pick-me-up at home, or to take your lunch to work instead of eating out every day. There’s nothing wrong with those behavioral changes, but because they often are associated with socializing with your friends, folks have a difficult time sticking to them.
And, truthfully, while the savings from them do add up, there are plenty of other — and easier — changes that will put a whole lot more money in your pocket.
Here’s my top 10 tips for saving money this year:
1. Get rid of your expensive bank. Bank fees can really eat into your nest egg, but opening an account with a local bank often can save you hundreds of dollars per year — just in fees. When I moved my business account from a super-regional bank in Florida to a community bank in Tennessee, my $42-per-month maintenance fees disappeared. That adds up to $504 in savings per year!
2. For any accounts in which you keep a balance, call your credit card company and ask them for a reduction in your interest rate. A $5,000 balance at 19.9%, reduced to 9.9%, can save you approximately $500 annually.
3. Realize that no matter what your insurance agent tells you, insurance is really not an investment. For example, let’s say you determine that $200,000 of life insurance would fit your family’s needs. On average, a 20-year term policy would cost you about $20 per month, or $240 per year. On the other hand, a $200,000 whole-life policy, that pays that amount in death insurance as well as a growing cash value, would set you back about $100 per month, or $1,200 per year.
And although your cash value does grow, it generally won’t make you rich or match the amount of money you could have made had you put that extra $80 per month in a real investment. Even if your investment earns no more than the average 10% per year that the S&P 500 historically has returned, that $80 per month could expand to almost $70,000 in 20 years. But if you bought whole-life, you will have spent about $24,000 during those 20 years, and your cash value is not going to make up the difference. Lesson learned: If you need insurance, buy insurance, but don’t think of it as an investment!
4. Wade into your phone and cable TV bills and eliminate services you aren’t using. You might find you don’t really need to spend $30 per month for texting (probably not, if you’re over 40!) or Internet data when you rarely use your smartphone to surf the Web, or the 14 movie channels that you don’t even watch, or that “bundled” package that’s costing you more than the selected individual services you really use.
And don’t forget to call your providers to find out what sweet deals they are offering this month. A friend of mine squawked loud enough that her cable provider just gave her the “all football” channel for free for a year! You will be surprised by how much you can shave off your phone and cable services if you really try (or maybe pick up an extra perk, like my friend).
